You hear it all the time in movies and TV shows, someone gets fired, and we’re told that all they’re entitled to is two weeks’ pay. Thankfully, the employment laws in Ontario are usually a lot more generous than that. That said, however, employees in Ontario are often entitled to more than what’s written in their employment contracts or the governing legislation.
As you read about the factors that determine how much an employee is actually entitled to as a severance package, you’ll quickly realize that a) figuring out how much a terminated employee is owed is complicated, and b) you should always speak to a Toronto employment lawyer if you are let go from a job to ensure that you’re not leaving money on the table.
The information below is specific to non-unionized employees not working in a federally-regulated industry. If you are a union member, your rights regarding severance pay are a part of your collective bargaining agreement, and if you work in a federally-regulated sector, you are subject to the rules contained in the Canada Labour Code.
How Much Termination Pay Am I Entitled To?
Employers in Ontario can terminate an employment contract at any time and for any reason – except if they are discriminating against an employee because of their religion, disability, race or any other protected ground.
If an employer wishes to terminate an employee without cause, however, they are required to provide the employee with a reasonable amount of notice that allows them to continue working for the amount of time it will take them to find a new job or pay them the money they would have made during the notice period.
If your employment contract contains a clear and legal policy regarding your rights to notice, you may only be entitled to what’s provided in the contract. Have an employment lawyer look it over to make that determination. Also consult an employment lawyer if your employment contract states that you are only entitled to what’s provided for in the Employment Standards Act (ESA) regarding notice of termination (one week of notice for every year of completed service, up to a maximum of 8 weeks).
With a termination clause that isn’t clear or that violates the minimum requirements of the ESA, you may have a case for wrongful dismissal and a legitimate claim for increased compensation.
Severance Pay Entitlements in Ontario
If you’ve worked at your job for at least five years, you may also be entitled to severance pay, as long as your employment meets these requirements. The minimum amount of severance pay is one week’s pay for every year worked to a maximum of 26 weeks. Combining the pay in lieu of notice with severance pay is commonly referred to as a severance package.
Severance Pay for Employees Without an Employment Contract or Termination Clause
If you do not have a written employment contract, the written contract you have doesn’t contain a clause regarding notice of termination or the clause in your contract is unenforceable, you may be entitled to a notice period and severance pay far greater than the legal minimums.
These are known as common law entitlements and are based on court decisions ruling that the ESA minimum entitlements do not provide someone with a reasonable amount of notice to find new employment.
Every claim is unique; however, some of the factors considered to determine a reasonable severance package include:
- How old the employee is.
- How long they worked and the position they held.
- The availability of similar jobs and the current economic climate.
When considered together, these factors often determine that an employee is entitled to a lot more severance pay than the legal minimums. This is why it’s crucial to get an employment lawyer’s opinion on whether you have a legitimate claim for the higher entitlement amounts.